Carswell v Secretary of State for Transport & Anor

The 2003 Agreement is clearly intended to satisfy the United Kingdom Government’s obligation to implement Article 1(4) of the Second Directive, by imposing a comprehensive scheme for the compensation of victims of untraced drivers, in which, so far as practicable, the MIB is required to perform all functions that lead to appropriate compensation being paid at its own cost. With limited exceptions, the entire burden of funding both the substantive awards and the administration of the scheme is intended to fall upon the MIB and, as the MIB is a self-funding and non-profit making agency of all motor insurers, ultimately upon all motor insurers.

Under clause 7, the MIB is under an obligation to take all reasonable steps to investigate a claim made to it. That obligation is fundamental to the scheme and is entire, in the sense that the whole burden of investigation falls on the MIB. The phrase “all reasonable steps” is telling. An applicant is not under any obligation to perform any investigation.

An applicant’s obligations are set out in clause 11. In form, they are conditions precedent to the MIB’s obligations, i.e. unless and until the applicant performs his obligations under clause 11, the MIB’s obligations to investigate or compensate are not triggered. If an applicant simply refuses to comply with is clause 11 obligations, then it would be open to the MIB to reject the application and take no further action on it, under clause 7(1)(a).

An applicant’s primary obligations are set out in clause 11(1). They are to make an application in such form, and provide in support of the application such information and assistance, “as may be reasonably be required by MIB... to enable an investigation to be carried out under clause 7 of this Agreement”. It is noteworthy that those final, quoted words govern both the making of the application, and the provision of supporting material and assistance.

Even without those final words, the obligations imposed upon an applicant would have to be construed in the context of the Agreement as a whole. Given that the MIB have the exclusive obligation to investigate a claim, what “may reasonably be required” by the MIB, in terms of the application and supporting information and assistance, is that which is reasonably required by the MIB to enable it to perform its investigatory function. However, those final words, which expressly link the clause 11 obligations imposed on an applicant to the MIB’s obligation under clause 7 to investigate, make that clear beyond any doubt. Certainly, in the face of the clear terms of clause 7, as a matter of construction, it cannot be open to the MIB to make a request under clause 11 that seeks to shift the obligation to investigate (or any aspect of that obligation) onto an applicant.

The investigation that the MIB is required to perform under clause 7 must be “at its own cost”. It cannot therefore seek to shift the cost burden of investigation onto an applicant either.

The provisions relating to the recoverability of legal costs by an applicant deserve some close consideration. They are at the heart of this claim.

Until 2003, the Untraced Drivers’ Agreements contained no provision for any contribution towards any legal costs of the applicant: although, following a side agreement between the MIB and the Law Societies of England & Wales and of Scotland, in practice the MIB paid a fixed sum of £150 as a contribution towards solicitors’ costs. That sum had remained unchanged for some years, and, by the time of the general review that resulted in the 2003 Agreement, was regarded as ripe for specific review. It was also thought appropriate to make the contribution an entitlement under the Agreement, rather than simply a matter of convention.

At the time of that review, Mr Roger Snook was the Technical Director of the MIB, a capacity in which he was responsible for discussions with the Department of Transport in respect of the review. His counterpart at the Department was Mr Richard Jones, who was Head of the Department’s Licensing, Roadworthiness and Insurance Division. Both Mr Snook and Mr Jones gave evidence before me.

In the course of the trial, it was suggested by Mr Andrew Ritchie QC for the Claimant that the bargaining position in these discussions was effectively unequal; because Mr Snook was very experienced in and dedicated to the MIB Agreements, whilst Mr Jones had a wide area of responsibility within the Department and, even taken with the Senior Executive within his Division who conducted much of the detailed discussions (Mr Mike Power), he had much less experience in the particular field of the Untraced Drivers’ Agreements. It was suggested that Mr Jones was, in relation to these discussions, naive: and that Mr Snook made use of that position to reduce the costs provisions eventually included in the 2003 Agreement to a level that did not properly reflect the work that was intended to be covered by those provisions.

There was no substantive evidence before me to support such a suggestion. Whilst Mr Snook was, of course, particularly experienced in the running of the Untraced Drivers’ Agreement, there is no evidence to suggest that that experience was used to obtain a deal that was unfair to applicants or those who give legal advice to them. In addition to his own experience, Mr Jones was able to draw upon the considerable relevant experience and weight elsewhere in his Division. Having considered all the evidence, I am quite satisfied that Mr Snook did not take advantage of him. Having heard and seen Mr Jones give evidence, I am quite satisfied that he could not have taken advantage, even if he had been minded to do so. Mr Jones came over as not only an experienced and competent official, but made of stern stuff.

The procedure whereby the costs provisions were agreed between the Department of Transport and the MIB simply belies the suggestion made by Mr Ritchie. The review of the costs provisions was the subject of consultation. Some consultees (including the Association of Personal Injury Lawyers) proposed that the MIB should pay for legal representation on the basis of work done, with an assessment procedure in the event of a dispute. In line with the general robust scheme of the Agreement, Mr Snook considered that a simple costs scheme based upon a scale was the better option: it was proportionate in the light of the limited need for an applicant to obtain legal advice (because of the inquisitorial nature of the scheme, with the MIB having the obligation to investigate a claim), and would avoid lengthy arguments about costs that sometimes occur in the court system. He favoured a costs provision linked to the value of the eventual award, similar to the costs provision in some Scottish jurisdictions. Following consideration of the consultation responses, Mr Jones and the Department were persuaded that a fixed scale of costs was the better course. Given the nature of the scheme, that was an understandable agreement between the Department and the MIB, even if disappointing to the professionals who had hoped for a more generous response. There is no evidence that Mr Jones’s agreement was anything other than fully and properly informed.

However, as Mr Jones said (2 June 2010 Statement, paragraph 6), the MIB proposals for the appropriate scale were “conservative”, and Mr Jones was anxious that the interests of the victims of accidents were protected as well as the interests of motorists and their insurers. The Department therefore asked the MIB to agree an appropriate scale with the relevant Law Societies, as representatives of the solicitors who would be affected. The team representing the Law Societies in those negotiations included an eminent former Chairman of the Association of Personal Injury Lawyers, and a representative of the Motor Accident Solicitors’ Society,

Mr Ritchie submitted that those involved in negotiating the scale levels of costs must have been aware of the draft provisions that would eventually become clause 10 of the 2003 Agreement, namely that there was to be a contribution paid by the MIB towards the costs of obtaining legal advice for (a) the making of an application, (b) the correctness of a decision made by the MIB and/or (c) the adequacy of an award, on a scale correlated to the amount of the substantive award: and were negotiating a scale of costs for that very work. I agree. As I understood the evidence of both Mr Snook and Mr Jones, both considered that likely; and those negotiating would have had to have known the work in respect of which scale of costs was to apply – that work was the work identified in clause 10. The scale that was agreed at a meeting on 31 July 2001 was that set out in the schedule to the 2003 Agreement (see paragraph 21 above). Mr Snook said that the 15% figure used for awards up to £150,000 was derived from the then-current “Green Form” legal aid scheme rates, and the 2% figure for the higher awards was derived from a figure used in the Scottish legal system at that time (Statement 27 May 2010, paragraph 4.6).

Mr Snook considered that the costs provisions agreed were “clear, simple and fair to all parties”; they were agreed with the Law Societies of England & Wales and of Scotland; and they reflected the fact that an application to the MIB is not part of an adversarial process but part of a compensation scheme, in which the investigative obligation fell upon the MIB (Statement 27 May 2010, paragraph 6.1). Certainly, I do not consider that the process by which the costs provisions were arrived at can be criticised. The Department of Transport were entitled to take the sensible course of requiring the scale of recoverable costs to be agreed between the MIB and the relevant professional bodies. The latter were well-represented by those experienced in acting for claimants. Again, there is nothing to suggest that those solicitor representatives agreed the levels on anything but a properly informed basis.

Mr Ritchie sought to make capital out of the MIB’s failure to comply with its agreement with the Law Societies that the costs scale would be reviewed every three years. He suggested that this failure again evidenced MIB’s unwillingness fairly and properly to pay those who advise MIB applicants.

The agreement between the MIB and the Law Societies to which I have referred (paragraph 43 above) indeed expressly provided for a review of the agreed costs provisions three years after the new Untraced Drivers’ Agreement was entered into, and every three years thereafter. It is also true that that did not find its way into the terms of the 2003 Agreement, and there in fact has been no such review. However:

In the circumstances, I reject any suggestion that the MIB has misused its experience and position to reduce the costs provisions unfairly to its advantage, in the course of those discussions that led to the agreement on the scale of costs or subsequently.

However – and this was Mr Ritchie’s primary submission on this issue – in line with the general scheme of the 2003 Agreement, the work covered by the scale of charges that was agreed was restricted to that identified in clause 10, namely the costs of obtaining legal advice for (a) the making of an application, (b) the correctness of a decision made by the MIB and (c) the adequacy of an award. It did not cover the legal costs of investigating any part of the claim – and for good reason. The obligation to investigate the claim fell upon the MIB, who could neither require the applicant to investigate any part of it nor transfer that obligation (or the costs of satisfying that obligation) to anyone else. That applies equally to liability and quantum. The MIB is obliged to investigate the quantum of any claim, on the basis of information and assistance from the applicant that is required to enable the MIB to perform that exercise, which an applicant is obliged to provide under clause 11.

Of course, nothing in the 2003 Agreement can prevent an applicant instructing solicitors to investigate his claim. There was evidence from all of those who are involved in such claims that, despite the clause 7 obligation on the MIB, some applicants prefer to instruct their own solicitors to investigate their claim or parts of it, such as quantum, particularly in higher value claims. It is open to an applicant, for example, to take the initiative and proactively prepare and send to the MIB a detailed schedule of quantum with submissions in support as one might prepare and serve in court proceedings. They may do that deliberately to take the initiative, hoping that, by doing so, they will obtain a higher award. Mr Paul Ryman-Tubb, the MIB’s Claims Technical Manager, confirmed that, where such information is provided, it would be taken into account by the MIB – indeed, he said that the MIB would consider itself bound to take it into account as part of its function in determining the proper level of compensation payable on the best available information. That seems to me to be a proper approach. However, Mr Ryman-Tubb also stressed that, whether or not an applicant and his legal team did such work and prepared and lodged such a schedule was a voluntary matter entirely for them. He confirmed that, in accordance with the explicit terms of the 2003 Agreement, the MIB could not require them to undertake such investigation – and could not require them to produce a full schedule of damages – under clause 11 or otherwise.

The 2003 Agreement also contains various provisions to enable an applicant to challenge and enforce various decisions of the MIB. There are four such procedures.

First, clauses 18-24 sets out a procedure for an applicant who is not satisfied with a clause 7 decision, or a clause 17 decision in relation to a provisional award or a proposal for a structured settlement, to appeal that decision to an arbitrator and thence to the court under the Arbitration Act 1996. If the MIB were to reject a claim because an applicant had failed to comply with a request for information made under clause 11 (see paragraph 32 above), then that rejection would be made under clause 7(1)(a) and would be appealable under clause 18.

The costs of a clause 18 appeal to an arbitrator are dealt with in clause 23(1)(e), under which the arbitrator is empowered to “order that the costs of the proceedings shall be paid by one party or allocated between the parties in such proportions as he thinks fit”: and, subject to some restrictions set out in clauses 23(4) and 24 (which, amongst other things, require the MIB to pay the arbitrator’s fee unless there were no grounds for the applicant bringing an appeal), his discretion as to those costs is very wide. It is clear (and was common ground before me) that, in context, the words “the costs of the proceedings” in clause 23(1)(e) mean the costs of the arbitration proceedings, and nothing wider: as Mr Ritchie conceded in closing, that is the only thing to which they can refer. “The arbitral proceedings” is a term used in clause 21(2) and the reference to “having regard to the proceedings” in clause 23(1) is clearly a reference to only the arbitration proceedings; and, in any event, any other construction would be so irrational that it would be inherently unlikely that it would have been the intention of the contracting parties. On a clause 18 arbitration, the arbitrator has no power to make an order in respect of any of the legal costs of the applicant’s claim on the MIB other than the costs of the arbitration itself.

Second, clause 28 enables an applicant to appeal to an arbitrator any “... decision, determination or requirement made by MIB...”, other than one for which provision is made under clause 18. Clause 28 would apply, for example, if the MIB were to require an applicant to investigate a claim or provide information under clause 11 that was not reasonably required by the MIB, i.e. not necessary to enable the MIB to perform its investigatory function (see paragraph 34 above). Such a requirement could be appealed to an arbitrator. Although it appears that only one reference under clause 28 has ever been made – and there were no details of that appeal before me – the Agreement proposes a proportionate response: clause 28(7) suggests that it will often be appropriate for an arbitrator to make a decision on a clause 28 arbitration on the papers, without a hearing.

The costs of a clause 28 arbitration are dealt with in clause 28(11), which provides:

“The arbitrator may, having regard to the subject matter of the proceedings and in an appropriate case, order that his fee or the costs of the proceedings (as determined according to clause 10(1)(a) of, and the Schedule to, this Agreement) or both his fee and those costs shall be paid by one party or allocated between the parties in such proportions as he thinks fit.”

That provision is not easy to construe. The references to clause 10(1)(a) and the schedule suggest that the costs that are being considered are the costs of the whole application to the MIB, which clause 10 and the schedule concern. However, curious as the reference to clause 10 is, I do not consider that a clause 28 arbitrator has power over any costs other than those of the arbitration over which he has presided, for the following reasons.

Therefore, whilst I do not fully understand why clause 28(11) refers to clause 10 and the schedule to the Agreement – although it appears to restrict the level of costs over which the arbitrator can make an award to those calculated under the schedule – I am firmly of the view that the proper construction of clause 28(11) is that an arbitrator has power to make a costs order only in relation to the costs of the arbitration over which he has presided. Any such order does not and cannot affect any liability of the MIB to pay a contribution towards the applicant’s costs of obtaining legal advice under clause 10.

Third, clause 31(5) declares that the 2003 Agreement is intended to confer a benefit on an applicant. Before me, there was considerable debate as to whether the terms of the 2003 Agreement, including clause 31, would enable an applicant whose claim had not been investigated by the MIB to bring proceedings against the MIB for breach of contract in accordance with the Contract (Rights of Third Parties) Act 1999, despite the fact that he is not a party to the Agreement. Mr Ritchie submitted that they would not. For some years before 2003, the MIB openly stated that it would not rely upon the lack of privity of contract between itself and an applicant to defeat court proceedings brought by an applicant against the MIB in reliance upon the contractual provisions of the Untraced Drivers’ Agreement (see, e.g., Persson v London Country Buses [1974] 1 WLR 569, at pages 572F and 573G-H: and Byrne, at paragraph 5). Given that historical stance, the legal position under the 1999 Act may be an empty point in practice: but, in any event, I do not consider that Mr Ritchie made good his submission as a matter of law.

Section 1(1) of the 1999 Act provides:

“Subject to the provisions of this Act, a person who is not a party to a contract... may in his own right enforce a term of the contract if –

(a)

the contract expressly provides that he may, or

(b)

... the term purports to confer a benefit on him.”

Miss Jemima Stratford QC for the Secretary of State submitted that clause 7 of the 2003 Agreement confers a benefit on an applicant, namely the investigation of a claim at the MIB’s expense which, in appropriate cases, leads to a report and an award of compensation to the applicant. That appears to me to be a real benefit of some substance; and that brings clause 7 within the scope of section 1(1)(b) of the 1999 Act. That the Agreement confers such benefits on individuals should come as no surprise: before me it was common ground (and, in any event, it is obvious) that it was the intention of the Second Directive, which the 2003 Agreement seeks to implement, to confer rights on individuals. I reject the submission of Mr Ritchie that the only relevant benefits are benefits granted by Article 1(4) of the Second Directive rather than by the 2003 Agreement: the specific benefits granted by clause 7 derive from clause 7 itself, and fact that clause 7 is part of an Agreement which seeks to implement the Second Directive is not to the point. Nor is it irrational if an action for breach of contract arises where there is a failure to investigate but there is no right of action where there are failings by the MIB in the course of an investigation or where there is an award, as Mr Ritchie suggested. The answer to that point is section 8 of the 1999 Act, under which a non-party to a contract is treated as a party to an arbitration agreement as regards disputes between himself and a promisor relating to the enforcement of a substantive right by that non-party: in other words, an action for breach of contract is only required and available where there are no rights of appeal to an arbitrator within the terms of the contract.

However, if Miss Stratford’s submission were correct (as I consider it to be), and an applicant would have the benefit of the 1999 Act to enable him to bring a contractual claim based on the 2003 Agreement in any event, clause 31(5) of the Agreement would appear to be otiose. Why is it there?

Miss Stratford said that the clause appeared in the working drafts of the Agreement between October 2002 and January 2003, quite late in the negotiations between the Department of Transport and the MIB, and following the delivery of the Advocate General’s Opinion in Evans ([2002] ECR I-14451). That opinion was adverse to the United Kingdom Government’s case in a number of respects, not ultimately followed by the full court. In particular, it expressed concerns about the lack of provision for access to the national courts in the Untraced Drivers’ Agreement. The Department responded to those concerns by inserting clause 31(5) into the draft Agreement. Miss Stratford submitted that, with the benefit of hindsight, that may not have been necessary: but that at least, she said, explained its appearance.

That is interesting background, and may go some way to explaining why clause 31(5) is in the Agreement, despite the compelling submission of Miss Stratford that it is technically unnecessary. However, be that as it may, we are, of course, concerned with a contract, not a statute. It is my task to identify the intention of the parties, on the basis of the words used. What clause 31(5) makes expressly and abundantly clear is that the 2003 Agreement is intended by the parties to confer a benefit on applicants as non-parties. Even if that does not bring the matter within the scope of section 1(1)(a) of the 1999 Act, it certainly reinforces the contention that it falls within section 1(1)(b). In my judgment, Miss Stratford’s submission, that clause 31(5) gives a clear signpost that non-party applicants are intended to have a right to sue on the contract where there is no right to appeal to an arbitrator, is correct – and patently so. The signpost could not be clearer.

For those reasons, I consider that an applicant has a right to sue the MIB if the MIB fails in its clause 7 obligations under the 2003 Agreement insofar as performance of those obligations confer a benefit upon an applicant, and insofar as the applicant has no opportunity to enforce them by way of appealing to an arbitrator under clauses 18 or 28.

Fourth and finally, clause 32 enables an applicant to enforce an award of compensation from the MIB through the courts, if the MIB fails to pay. I do not consider that this specific enforcement right detracts from the conclusion I have drawn that applicants have a right to sue the MIB in the circumstances set out in paragraph 63 above, under the umbrella provisions of the 1999 Act.

The principles on which a member state can be liable for damages for loss caused to an individual as a result of a breach of European law by that state are well-established and, for the purposes of this claim, uncontentious (although, of course, the application of the principles to the facts of this case is in issue).

As part of the overarching principle that national courts are under an obligation to achieve full and effective protection of rights derived from European law, in Francovich v Italian Republic [1991] ECR I-5403 (Joined Cases C-6/90 and C-9/90), the European Court held that it was inherent in the then European Community Treaty that a member state is liable for loss caused to individuals as a result of a breach of European law for which the state is responsible. However, where the alleged breach is on the basis that the member state had failed to take steps to implement a directive, it held that such liability only arises when four conditions are satisfied, namely:

In this action, (i) and (ii) are conceded by the Secretary of State. (iii) and (iv) (seriousness of any breach, and causation) are in issue – but the Secretary of State’s primary submission is that the case does not get as far as the Francovich criteria, because there was simply no breach of European law, the 2003 Agreement adequately implementing Article 1(4) of the Second Directive. Miss Stratford for the Secretary of State (supported by Mr Stephen Worthington QC for the MIB) submitted that, upon proper consideration, the grounds identified by Mr Ritchie upon which he contends that there is a breach (set out in paragraph 27 above) lack merit.

It is therefore to those individual grounds that I now turn.

This first ground of appeal is a root-and-branch attack on the inquisitorial nature of the scheme of the 2003 Agreement.

Mr Ritchie submitted that an applicant is entitled to the same right as he has in civil proceedings in England & Wales, i.e. the right to prove his case before an independent body, with the assistance of lawyers the costs of whom are reimbursed if he succeeds with his claim. The particular scheme set out in the 2003 Agreement is, he submitted, fatally flawed because the MIB is not independent. As it comprises all motor insurers (who are companies run for profit), it is commercially interested in the outcome of any claim; and it is both investigator and the body liable to pay any award. That submission placed particular emphasis on the commercial nature of the MIB, and Mr Ritchie drew the distinction between such a scheme and a scheme in which the investigator/inquisitor is judicial or at least another arm of government, such as a government department manned by civil servants (e.g. the Criminal Injuries Compensation Authority, “CICA”).

I strongly reject any suggestion that a compensation scheme based upon an inquisitorial system is either inherently bad – it is of course the system of choice in many European jurisdictions – or that it necessarily offends the principles of equivalence and effectiveness in circumstances where the comparator system is adversarial, i.e. a system in which a party is entitled to investigate a claim and seek to prove it by evidence he has gathered and submissions he makes. The compensation of victims of untraced driver demands a system different to a certain extent, because, by definition, the driver at fault cannot be identified and pursued through adversarial procedures. The submission, if correct, would mean that it would be very difficult if not impossible for a member state with an adversarial court system to set up any compensation scheme at all, unless such a scheme was comprehensive in its scope. That cannot be correct. The principle of equivalence requires the comparison of different systems, and, where the bases of the systems are profoundly different, the comparison may not be easy. However, I see no insuperable difficulty in comparing an adversarial system with an inquisitorial one. It comes as some comfort that neither the European Court of Justice (Evans, at paragraph 28: see paragraph 79 below) nor the Court of Appeal (Byrne, at paragraph 21(iii)) appear to have seen any such difficulty, either.

Nor am I persuaded that the fact that the body charged with being the investigator/inquisitor is not a public body, but a private commercial body, is determinative. Whether a body is a proper body to carry out the relevant investigatory function will depend upon all of the circumstances, and I am not persuaded that the fact that the body is “commercial” and the payer of any award means that it cannot, as a matter of law, properly carry out that function.

In terms of relevant circumstances in this case, I would refer to two.

First, there is the nature of the MIB. As Mr Ritchie submitted, the MIB is a mutual of profit-making insurance companies – but Mr Ritchie accepted that the CICA is not open to attack on the basis of lack of independence simply because it is both investigator and payer, and it seems to me that there is not as much difference in practice between the MIB and the CICA as Mr Ritchie would have. The CICA investigates claims for compensation as a result of injuries caused during the commission of a crime by another. Substantive awards and the administrative costs of the Authority are paid for out of the public purse. The MIB comprises all motor insurers, and, although they are of course profit-making organisations, any payout will be borne across those insurers and will therefore not interfere with competitiveness inter se. A United Kingdom motorist cannot insure but through an MIB insurer: there is no option to go outside them. Consequently, any increase in the levels of payout by the MIB is more likely to affect premium rates than profitability: in which case, the only real incentive to keep payouts down would be to protect insured drivers generally, rather than insurance companies. The extent to which the effects of payouts on the profitability of insurance companies would impact on those involved in settling MIB claims is therefore, at highest, very uncertain indeed.

Second, as Mr Worthington submitted, in assessing the propriety of the scheme, one must have regard to measures built into the scheme that provide safeguards against the MIB acting in a biased or unfair or self-serving way. For example, under clause 10, the applicants are enabled to obtain legal advice in relation to both the application they make and any decision of the MIB (including that of the adequacy of a proposed award), and at the MIB’s cost. There are appeal procedures under clauses 18 and 28, which enable an applicant to take a decision of the MIB to an arbitrator and thence, on a point of law, onwards to the Supreme Court if appropriate. There is, Mr Worthington submitted, also a procedure by which an applicant can enforce the MIB’s obligation to investigate, if the MIB take no action on a claim (dealt with in paragraphs 57-63 above: and under Ground 3 below, see paragraphs 102-105).

On the basis of that, even without the assistance of authority and evidence of how applicants view the system in practice, I would have held that the scheme embodied in the 2003 Agreement, even involving as it does an investigator/inquisitor which is not from the public sector, in general adequately safeguards the rights of those who are the victims of untraced drivers.

But there are relevant authorities on this issue, notably Evans (cited at paragraph 15 above), in which the implementation of Article 1 (4) of the Second Directive through the MIB Agreement (in that case, the 1972 Agreement) was considered in some detail by the European Court of Justice.

On Christmas Day 1991, Mr Evans was in the road by his parked car, trying to remove a parcel from it, when he was struck by another car. The driver of that car was never traced. A claim was made to the MIB, who made an award which was appealed. The claimant appealed against the arbitration decision to the Commercial Court, in respect of the jurisdictional question as to whether the arbitrator had power to award interest. That appeal failed in the Commercial Court and the Court of Appeal, and the House of Lords refused leave for a further appeal. The claimant then commenced proceedings against the responsible Minister of State for damages, on the grounds of his failure properly to implement Article 1(4), contending that the Agreement failed to provide compensation “at least up to the limits of the insurance obligation” in that it conferred no right on victims of untraced drivers to bring a claim against the MIB and granted them no access to judicial bodies. As part of those grounds, the relevant appeal and absence of costs provisions were prayed in aid. As indicated above (paragraph 37), in the pre-2003 Agreements there were no costs provisions: but, as a matter of practice, the MIB paid £150 plus VAT to legal representatives for advice and assistance.

The European Court held that it was lawful in principle for the United Kingdom Government to implement Article 1(4) through an agreement with an agency such as the MIB, provided that the agreement obliged the MIB to provide victims with the compensation guaranteed to them by the Second Directive and provided that victims could address themselves directly to the MIB (see paragraphs 34 and 37). The court emphasised that the Second Directive did not oblige member states to introduce a system which placed the awarding body (i.e the MIB) in the same position as a defendant tortfeasor in civil liability (paragraph 28). In other words, the court saw no objection in principle to the fact that the Agreement introduced a different, inquisitorial, system, as compared with the adversarial civil system which applies in the United Kingdom in the case of identified and insured vehicles.

In Evans, there was an overt attack by the claimant/applicant on the basis that the MIB was a private organisation. Mr Ritchie submitted that that was not a specific attack on the commerciality of the MIB, as opposed to its private nature – but, with respect, that submission is vanishingly thin. The European Court was aware of the nature of the private body with which it was dealing – it was a body that was itself non-profit-making, but comprising of commercial, profit-making insurers. The Court emphasised (at paragraph 76) that it was for the national legal system of each member state to lay down detailed procedural rules governing actions for safeguarding rights of individuals derived from European law, and (at paragraph 37), so long as the relevant agreement is construed and applied as obliging a private body to provide victims with the compensation guaranteed to them by the Second Directive, then the obligation to provide such compensation can be given to that private body by way of agreement between the relevant governmental arm and it. The Court did not seek to limit the scope of those remarks.

Furthermore, although the point may not have been directly in issue, Carnwath LJ in Byrne appears to have had no difficulty in the premise that the Untraced Drivers’ Agreement, looked at as a whole, was not bad because of any commerciality or lack of independence on the part of the MIB. He certainly was aware of the true nature of the MIB. Had that premise possibly been incorrect, one would have expected it to have been queried by the court, if not challenged by the claimant.

Finally, although this point really goes to partiality rather than lack of independence, Mr Ryman-Tubb gave evidence that, in 2009, 18,000 claims were made on the MIB in relation to untraced drivers. Only 290 awards went to arbitration, a number which does not suggest that there is widespread dissatisfaction with the procedures and awards made by the MIB. I shall return to suggestions of partiality when I deal with the Claimant’s complaints about the manner in which her claim was handled by the MIB (at paragraphs 108 and following below).

In all of the circumstances, I do not consider that the nature of the MIB as a body leads to any applicant having a legitimate complaint that his rights under European law are compromised.

Mr Ritchie submitted that there was an inherent tension between clauses 7 and 11 of the Agreement, compounded by the restriction on costs recoverable under clause 10. Clause 7 requires the MIB to investigate a claim. To enable it to do so, under clause 11, the MIB is empowered to require an applicant to provide information and support to the MIB, but the Agreement makes no provision in clause 10 (or the schedule thereunder) for the costs of so doing. In Mr Ritchie’s closing submissions, he accepted that there was no tension between those provisions in smaller cases: the tension only appeared in a small number of complex cases, such as the instant case, where an applicant cannot reasonably be expected to provide (for example) a detailed schedule of loss without legal assistance. He submitted that, in failing to provide for the costs of legal assistance in this respect, the Secretary of State had failed to safeguard the European law rights of a victim of an untraced driver under Article 1(4) of the Second Directive, because the scheme he had adopted through the 2003 Agreement failed to comply with the principles of equivalence and effectiveness.

Mr Ritchie’s reliance upon structural tension between clauses 7 and 11 appeared to diminish during the course of the trial, to almost vanishing point during his closing submissions. In my judgment, there is no such tension. Indeed, those clauses appear to me to be complementary. Clause 7 requires the MIB to investigate a claim. Clause 11 requires an applicant to make an application in such form, and provide in support of the application such information and assistance “as may be reasonably be required by MIB... to enable an investigation to be carried out under clause 7 of this Agreement”. As I indicate in paragraph 34 above, as the MIB have the exclusive obligation to investigate a claim, what “may reasonably be required” by the MIB, in terms of the application and supporting information and assistance, is that which is reasonably required by the MIB to enable it to perform its investigatory function. No more, and no less.

Nor do I agree with Mr Ritchie’s contention that necessary legal advice in relation to an applicant responding to a clause 11 request for information is not covered by clause 10. Each element in clause 11(1) – making the application, and providing statements, information and other assistance – are all subject to the reasonable requirement of the MIB to enable the MIB to perform its investigatory function. All such information etc should properly, if available, be submitted with an application. There is no rational basis for distinguishing between information necessary for the MIB to perform its investigatory function that an applicant in fact submits with his application form, and such information that is not submitted at that stage but is required and/or submitted later. For example, I do not consider it is the intention of the 2003 Agreement to deny a legal representative his costs if he assists an applicant in putting together the latter, after the applicant has in person lodged an application with the MIB with inadequate support to enable the MIB to do its job. I am satisfied that, construing the provision purposively, it was the intention of clause 10(1)(a) of the 2003 Agreement to include the costs of providing information and assistance to the MIB necessary to enable it to carry out its investigatory function, whenever that information is provided and whether or not it is provided following a clause 11 request. Given that the MIB cannot require the applicant to perform any investigatory work, the work required to respond to any request will necessarily be limited in nature.

Nor am I persuaded by Mr Ritchie’s submission that an applicant – at least, he submitted, an applicant in a complex case – is bound to perform some investigatory work, because of the limited period he has to appeal from the date of the operative clause 7 decision. If he did not do so, Mr Ritchie submitted, an applicant could not prepare an appeal, which has to be accompanied by supporting evidence, in time. In part, this appears to have been a challenge to the fundamentals of inquisitorial nature of the scheme, particularly as to the suggestion that a party must perform parallel investigations to avoid possible prejudice if the inquisitor fails properly to investigate in timely fashion, with the result that important evidence is lost. I deal with that broad challenge above, under Ground 1 (paragraphs 69-83).

In respect of the specific submission, I do not accept that an appeal cannot be made within a relatively short period of time. Even where an applicant considers that the MIB have failed to make all relevant enquiries (e.g. have failed to interview a particular witness), an appeal in an inquisitorial jurisdiction such as this would not necessarily have to provide the missing evidence, but only why that evidence is relevant and why the MIB ought to obtain it in line with its clause 7 obligation to investigate. It is noteworthy that an arbitrator has the power to require the MIB to conduct further investigations (clause 23(1)(b)). In any event, Mr Ryman-Tubb said that, in practice, an applicant would be given more time to produce the evidence, if he required it.

In summary, therefore, under the 2003 Agreement, where an applicant seeks legal advice in respect of making an application, the correctness of a decision of the MIB or the adequacy of an award offered by the MIB, the legal adviser is entitled to costs on a fixed scale. That advice also covers advice upon responding to the proper requests from the MIB under clause 11. I find no tension or incongruity between the various clauses of the Agreement.

Is the manner in which an applicant’s costs are dealt with under the Agreement any less favourable than the system for provision of costs where a claim is made against an identified insured driver?

It is simplistic to suggest that there is a substantive difference between the regimes, because the costs of an applicant under the 2003 Agreement are in part irrecoverable, whereas the costs of a litigant against an insured driver are recoverable in full. Any litigator knows that there is no guarantee that all of the costs of even a successful court claimant are recoverable on an indemnity basis. But in any event, as I have indicated (paragraph 16 above), equivalence requires consideration of the relevant systems as a whole, and it does not demand identicality.

Of course, in court proceedings for high value cases, under CPR Part 44 there is an opportunity for a party to be reimbursed for his reasonable and proportionate legal costs of investigating and successfully prosecuting a claim. However, Miss Stratford submitted, with force, that, in considering the equivalence of the costs provisions in the 2003 Agreement, the following factors have particularly to be taken into account:

The manner in which costs are dealt with under the inquisitorial system of the 2003 Agreement which applies where the victim of an unidentified driver seeks compensation from the MIB is necessarily different from the manner in which they are dealt with where the victim of an identified and insured driver seeks damages in the adversarial court system. However, the factors I have identified above are substantially advantageous to applicants who claim on the MIB, rather than enter into court proceedings to obtain compensation from an identified insured driver. In the light of all the relevant factors, I consider that the procedural rules under the 2003 Agreement are no less favourable than those governing the court system, and therefore the principle of equivalence is satisfied.

I can deal with the principle of effectiveness shortly: it was the subject of little debate before me, and, in my judgment, it is clearly satisfied by the costs provisions of the 2003 Agreement. Given that the burden of investigation falls entirely on the shoulders of the MIB – and the role of the applicant’s legal representatives is accordingly limited – I do not consider it is arguable that, looking at the procedure as a whole in its proper domestic context, the costs provisions in the 2003 Agreement render the application of the applicant’s rights under Article 1(4) of the Second Directive either impossible or excessively difficult. The costs regime ensures that, if an applicant requires legal advice (which he might at crucial times of the process), he is enabled to obtain that advice on the basis of a fixed scale fee. Whilst of course, as with any fixed fee scheme, in a specific case legal costs may be more or less than the allowed fixed costs, there is no evidence before me that, in cases generally or in any particular category of case, the reimbursement of costs at those levels for the limited work that can be required of an applicant and his lawyers under the scheme, is substantially inadequate.

For those reasons, I do not consider that the costs provisions of the 2003 Agreement are contrary to the principle of equivalence or that of effectiveness. Indeed, with respect to the able submissions of Mr Ritchie, I consider that the fee scale scheme of costs under the 2003 Agreement – payable as a contribution towards an applicant’s legal costs of ensuring that the MIB have the information etc that it needs to enable it to investigate a claim and make a report and proposed award, and to advise upon any decisions of the MIB including the adequacy of any award proposed – is commendably simple, sensible and proportionate.

In my judgment, the Claimant has not shown that the 2003 Agreement fails properly and lawfully to implement Article 1(4) of the Second Directive: and the Claimant’s challenge to the manner of implementation fails on this ground, because the Secretary of State is not in breach of his obligation to implement that Directive.

My conclusion with regard to the absence of any breach is firm. I am quite sure that there is no breach. However, even if I were wrong in that, a mere breach would be insufficient to enable the Claimant to obtain damages. Under the Francovich criteria, damages are only payable if the breach is sufficiently serious, i.e. if the failure of the Secretary of State to exercise his discretion over procedural rules properly was “manifest and grave”. It is of course noteworthy that, in such areas as these, the Secretary of State has a wide discretion in relation to procedural rules by way of implementation of a European Directive. But, on the facts of this case, even if, contrary to my view, the Secretary of State was in breach of his obligations by straying outside the proper ambit of that discretion, in my judgment it is simply unarguable that any breach was of that seriousness.

In coming to that view, I have taken into account all of the factors to which I have referred above, in relation to whether there was any breach at all. I have particularly taken into account the fact that any breach was not an obvious breach of a clear and precise rule. At the high point of the Claimant’s case, the Secretary of State would have erred in applying the principles of equivalence and effectiveness in relation to the costs provisions in the 2003 Agreement. The application of those principles to this case requires the comparison of two very different systems. I stress that I have come to the strong conclusion that there was no breach at all in this case: but, if there were a breach, the Secretary of State erred in his application of the principles, in an area which, at the very highest from the Claimant’s point of view, was legally uncertain. It cannot sensibly be said that, as a matter of law, he was clearly wrong.

Mr Ritchie did not suggest that there was, on the part of the Secretary of State, any bad faith, recklessness or even negligence. At most, he said, there was naivety, in the manner in which Mr Jones was put into bat against Mr Snook. I have found that there was not even any such naivety (see paragraph 40 above) – but, even if there had been, that would not be sufficient without more to amount to a breach of sufficient seriousness to found a claim for Francovich damages

In the circumstances, I cannot see how it could be said that the United Kingdom Government has manifestly and gravely disregarded the limits of its discretion, particularly when, in Evans, the European Court of Justice appears to have given the Untraced Driver Agreement a clean bill of health, as a matter of principle; and it has not been questioned in national cases, such as Byrne. Since those cases (which were both under the 1972 Agreement), the costs provisions in Agreement have of course improved for applicants (see paragraphs 37 and following above).

Finally, I turn to the issue of causation. The issue required detailed consideration of the level of costs charged by Boyes Turner, which was precisely what clause 10 and the schedule sought to avoid. In those circumstances, I am pleased that, in the light of my findings on breach, although I see the force in some of the submissions on causation made on behalf of the Secretary of State, it is unnecessary for me to consider that issue further.

As his third ground, Mr Ritchie submitted that the scheme of the 2003 Agreement was flawed because there is no clear and effective way for an applicant to enforce the MIB’s obligation under clause 7 to investigate a claim.

I can deal with this ground shortly. As will be clear from the discussion above (paragraphs 57-63), I am quite satisfied that the 2003 Agreement did provide a means of enforcing the MIB’s obligation to investigate under clause 7.

If the MIB makes a decision or determination during the course of its investigation into a claim, then such decision or determination is appealable to an arbitrator under clause 18 or clause 28. That much is common ground.

If the MIB takes no steps to investigate a claim, I suggested during the course of debate that that might amount to a decision not to take any steps, appealable under clause 28. However, as a matter of contractual construction, I accept that it is unlikely that the parties had that in mind. The parties (the Secretary of State and the MIB) were of course before me, and both denied that was the intention. But, if that route of challenge is not open, then the Contract (Rights of Third Parties) Act 1999 (with or without the aid of clause 31(5)) gives an applicant the right to sue the MIB in contract in court proceedings to enforce the obligation to investigate. It is clear, in my judgment, that an applicant has the right to enforce the MIB’s clause 7 obligation, by one of those routes or the other.

For the above reasons, I find that the 2003 Agreement was a compliant procedure for the implementation of Article 1(4) of the Second Directive. Since an entitlement to Francovich damages only arises where there is such a systemic failure, those findings are sufficient to dispose of this claim.

However, although a failure to carry out a compliant procedure is insufficient to found such a claim (see Moore v Secretary of State for Transport [2007] EWHC 879 (QB); [2007] EuLR 645 at paragraph 52), I should briefly touch upon the complaints that the Claimant made about the manner in which her claim was handled by the MIB because of both the time spent at the hearing considering those issues, and the importance attached to the complaints by the MIB. It would be wrong for me simply to leave them open.

The Claimant’s application to the MIB was dealt with by Mrs Glenda Crawford, someone with many years experience of handling insurance and MIB claims, but without legal qualification. The general criticism of how she handled the claim, including the time frame in which she did so, faded as the trial wore on. I need not deal with it here. The primary criticisms of the manner in which the MIB dealt with Mrs Carswell’s were, by the end of the trial, three-fold. I will deal with them in turn.

First, there was complaint about letters from Mrs Crawford – “ominous letters”, as Mr Ritchie called them – that, it was suggested, both showed partiality against the Claimant’s claim on Mrs Crawford’s part and, with other matters, were instrumental in moving the Claimant’s solicitor, Ms Smerdon, to take investigative steps.

The main letter of which complaint was made was that of 10 April 2007. Mrs Crawford had just received the police report, which had been slow in arriving. The letter confirms that the report had been sent to the MIB’s investigators, asking them to interview the remaining witnesses. The letter continued:

“You will note in particular the statement made by Paul Rendell, which paints a rather pessimistic view of liability from your client’s perspective. As soon as we have interviewed the remaining witnesses we will be in a position to revert to you with our views on liability.”

Mr Rendell was driving a car, when he saw the accident. His statement was unhelpful to the Claimant, as he indicated that Mr Carswell, with the pedestrian light against him, tried to rush across two lanes of traffic for which the traffic lights were on green. Mr Rendell was in one of those lanes, and had to perform an emergency stop. He regarded Mr Carswell as largely to blame for the accident. Mr Rendell had a passenger who, in due course, made a statement expressing much the same views.

I do not regard the 10 April 2007 letter as in any way “ominous” or improper. From this report, it would have been clear to any experienced road traffic accident practitioner – and was clear to Ms Smerdon as such (see Transcript 9 November 2010, page 174 lines 8-12) – that there was likely to be an element of contributory negligence, although the extent was unclear. Although the evidence of the lights came from only two of several witnesses, Mr Rendell and his passenger were independent witnesses whose evidence was likely to carry weight. It was likely that the degree of contributory negligence would be significant. That is evidenced by the fact that, when the papers were sent to Counsel (Mr Ritchie) to advise, he estimated the contribution to be perhaps 50% but possibly as high as 66%.

I do not regard Mrs Crawford’s letter of 10 April 2007 as saying more than that – this is a contributory negligence case. With the benefit of hindsight, “pessimistic” was not the best or most accurate word to use in these circumstances; but Mrs Crawford no doubt has a heavy workload and perhaps does not have the luxury of choosing her words as carefully as she might. In any event, I do not consider the wording or tone of this letter “ominous” or improper or betraying impartiality. The letter was, no doubt, disappointing for Ms Smerdon to receive – but that resulted from the evidence of Mr Rendell, not the reference to that evidence in the covering letter.

I deal with the apparent impetus that this letter gave to Ms Smerdon to press forward with her own investigations below (see paragraphs 126-132, but especially paragraph 131, below).

The second criticism of the MIB is that, having all of the information they needed to make a decision on primary liability and contributory negligence, they failed to make a decision on liability. Mr Ritchie submitted that that decision should have been made in November 2007. He submitted that, under clause 7, once the MIB have obtained the necessary information to make a decision about primary liability and/or contributory negligence, they are bound to do so. That construction, he submitted, was supported by the reference in clause 7(1)(b) to the MIB conducting a full investigation and making a report on the claim “as soon as reasonably practicable having regard to the availability of evidence”: and by clause 7(2) which, by the use of the word “shall”, requires the MIB, on the basis of the report, to reach a decision as to whether to make an award. Clause 16 requires the MIB to notify an applicant of any clause 7 decision made, with reasons.

Again, as a matter of construction, I do not find clause 7 easy. It seems to me that problems in construction may have arisen by the insertion, recently, of the provisions for interim reports and awards. If I were pressed, I would favour Mr Worthington’s interpretation of the clause as a whole, namely that, if the MIB can reach a decision that the agreement applies and can determine the amount of the award, then it must make a full award: but, if it decides that the Agreement applies but cannot determine the final amount of the award (because the quantum of the award is still uncertain), then it may (but is not required to) make a decision on liability (with or without contributory negligence) and an interim report.

However, it is not necessary for me to express a concluded view on that issue, and I decline to do so. I leave that issue to a claim in which it may be decisive. It is not determinative in this case for the following reasons.

On 17 November 2007, Mrs Crawford sent Ms Smerdon a letter indicating that the MIB would make an award, but subject to an unspecified deduction for contributory negligence: it was proposed to make an offer on liability and quantum when the Claimant had sent the MIB a schedule of quantum (to which I return below). Mr Ryman-Tubb said that, if Ms Smerdon had then asked for an indication of the percentage contributory negligence the MIB had decided to apply, they would have told her. However, she did not. Nor was she advised to press for such a decision by Mr Ritchie, from whom she sought advice. She and he were content to receive a rolled up offer at a later stage. The Claimant lost nothing by this course, because there is no evidence that she wished to have such an interim award. She certainly did not seek one, and there was no pressing need for money for (e.g.) care needs, because her husband had, unfortunately, by this time died. The Claimant does not appear to have incurred any further liability costs as a result of not knowing what the contribution proposal was to be, because the costs of the liability investigation steps – the plan, light sequence evidence and witness statements – were incurred as a result of Mr Ritchie’s advice of 10 October, given well before the 17 November 2007 letter was received. In any event, Ms Smerdon did not seek the MIB’s pre-approval for such disbursements, as she was bound to do under paragraph 3 of the schedule to the 2003 Agreement. Had she sought such approval, that is likely to have prompted a dialogue in relation to liability and percentage contribution.

In short, I accept Mr Worthington’s submission that, even if the MIB breached the terms of clause 7 by failing to notify the Claimant of its decision on liability including contributory negligence, that caused Mrs Carswell no prejudice and had no effect on the manner in which the Claimant’s legal representatives managed the claim.

Third and finally, Mr Ritchie criticised the MIB for requesting a schedule of loss from the Claimant’s solicitor. In the MIB’s Defence, it pleads (at paragraph 7(6)):

“[Glenda Crawford] asked for a schedule of loss. The request was intended to elicit from the Claimant what heads of loss would now be claimed. If that schedule had been forthcoming, [Mrs Crawford] would have carried out an investigation of the losses and obtained evidence to calculate them.”

Further, Mr Ryman-Tubb said he was well aware that the obligation to investigate fell upon the MIB, in relation to both liability and quantum: and that staff were trained to that effect. The MIB could not transfer that obligation onto an applicant. Clearer training materials were now used, in the light of the issues raised in this claim: but the substance of the message had been the same at the time of these events. Whilst, unfortunately, no historical training materials are available, I accept Mr Ryman-Tubb’s evidence as to the gist of the training at that time.

However, that training has to be compared with the terms of the correspondence sent by Mrs Crawford to Ms Smerdon. There was a string of such letters. On 31 June 2006, there was a request for the applicant to supply “earnings and any other relevant information”. On 4 July 2007, a request: “Let us have a schedule of loss so we can consider that with liability”. On 6 August 2007, perhaps most importantly, a request: “Please let us know whether you have full details of all losses so we can proceed to offer...”. There were further reminders in respect of “the schedule” on 17 November 2007, 5 March 2008 and 22 May 2008: the middle reminder also asking for “supporting documents”.

Ms Smerdon took these as requests for a full schedule of loss as one might serve and file in a multi-track claim. She thought that the requests were made under clause 11 and so, unless and until she provided the requested schedule, the Claimant would not receive an award. In oral evidence she said she considered the request for such a schedule “reasonable”.

Whatever Mrs Crawford’s intention or training might have been, as Mr Ryman-Tubb frankly accepted in his oral evidence, a solicitor receiving such requests could quite reasonably have concluded that the MIB were requesting a full schedule of loss, as did Ms Smerdon. In my view, that is clearly the case. The 6 August 2007 letter would particularly lead an experienced solicitor to that conclusion.

This was an unfortunate series of events. For Mrs Crawford’s part, either she intended to ask for a full schedule of loss, that would have required the Claimant’s solicitors to do considerable amount of investigatory work, contrary to her training and the restrictions in clause 11; or she did not intend to request such a schedule, in which case the wording of her letters was misleading. For Ms Smerdon’s part, she was well acquainted with the terms of the 2003 Agreement, and therefore ought to have been aware that, under clause 11, the MIB could only request information that it required to enable it to perform its investigatory function: a request that sought to transfer that function onto Ms Smerdon would not have been a proper request under clause 11. It would not have been a reasonable request under clause 11, as Ms Smerdon apparently thought it was. Ms Smerdon ought also to have been aware of her right to appeal against that requirement under clause 28, but she did not consider seeking to appeal the requirement for a full schedule.

Ms Smerdon is clearly an experienced practitioner, well acquainted with the 2003 Agreement. Initially, I was puzzled at the apparent failures on her part to have worked the appropriate provisions of the Agreement. However, that puzzlement ebbed as she gave her evidence.

I have already indicated (paragraph 49 above) that some practitioners follow the understandable course of taking proactive steps, particularly in larger claims and particularly in relation to quantum, on the basis that, even though the costs are unlikely to be recovered from the MIB in full (because of the clause 10 restrictions on level), they may achieve a higher net award for their client. That is a perfectly proper course, so long as the client accepts it on an informed basis.

At the time of these events, Mrs Carswell of course had much to deal with, most importantly her husband who was in a persistent vegetative state for nearly 18 months before he died. In those circumstances, it was understandable that she left the handling of the claim much to her legal advisers. However, she said that she understood that she was to be responsible for Boyes Turner’s fees and disbursements, subject to the limited recoverable amounts from the MIB: and that she was aware that the recoverable amount for costs may not cover all of the costs incurred. She was content with that. Even after the event, she has no complaint about the manner in which Boyes Turner handled the claim – she expressed pleasure in that – and she is more than content with the eventual net award that they obtained for her. Although no doubt she would prefer to have £15,000 than not, in terms of the result, she obtained what she bargained for. She has no complaint about that.

Ms Smerdon obtained advice from Counsel, Mr Ritchie, who is, if I might say so, an experienced Leading Counsel expert in personal injury matters, including untraced driver claims on the MIB. He was first instructed to advise on liability and quantum, and prepare a schedule of loss, in this matter on 8 August 2007. His advice is dated 10 October 2007. Paragraph 20 of that advice is important. It gives advice on the procedure to be followed, in the following terms:

“The procedure for obtaining compensation is for Instructing Solicitors to submit the evidence they have and a written submission on liability and quantum. If the MIB make a poor finding on either the Claimant should appeal to the arbitrator.”

The substance of that advice was repeated in his later advices on 25 March 2008 (paragraph 10), and 20 October 2008 (paragraph 7).

When this was put to Ms Smerdon in cross-examination by Mr Worthington, she accepted that, having been asked for a full schedule of loss by the MIB, she thought that it was in Mrs Carswell’s best interests to obtain the evidence and submit it to the MIB (Transcript 10 November 2010, page 108 lines 3-6). That proactive approach – rather than seeking to challenge the request – was effectively endorsed by Mr Ritchie in his various advices. He did not suggest that the requirement for a full schedule should be challenged, by way of a telephone call or letter to Mrs Crawford, or more formal steps under the terms of the Agreement: rather, he advised that a full schedule should be prepared, and submitted to the MIB with written submissions.

On the basis of all the evidence, I am quite sure that Ms Smerdon took the view that, in this complex and high value case, it was in Mrs Carswell’s best interests to take a lead on quantum, by preparing and submitting a full schedule and written submission on quantum. Her initial cost estimate (of £10,000-20,000 for solicitors’ costs) suggests that she always intended to do more in this case than merely provide the MIB with the information necessary for them to investigate the claim themselves. Mrs Carswell was content that such a proactive approach be taken in relation to quantum. She was aware that the recoverable costs were limited, and may not in the event cover all the expenditure that was being incurred. The full schedule and submissions on quantum were prepared and provided as a matter of choice, and not as a result of the unchallenged request made by Mrs Crawford for such a schedule (or, indeed, any of the other correspondence from by Mrs Crawford in relation to, e.g., her views on liability). The request for such a schedule, requiring as it did a great deal of investigatory work, could not have been a “reasonable” requirement under clause 11, as Mr Ryman-Tubb frankly and readily accepted. It was however something that Ms Smerdon, on advice, considered ought to be done in the best interests of her client, in any event.

It is important to stress that Ms Smerdon cannot be faulted for that course. In hindsight, it certainly resulted in a settlement that was good relative to the estimated quantification of the claim made by Mr Ritchie. However, that does not mean that, under the 2003 Agreement, Ms Smerdon is entitled to seek reimbursement of the costs of that additional work from the MIB. She is not.

For those reasons, other than the wording of the requests for a full schedule of costs, I do not consider the complaints about the manner in which the MIB handled this claim to have been substantiated: nor do I consider that the Claimant has suffered any loss or prejudice as a result of the way in which the MIB handled the claim.

This claim involved, primarily, issues of law concerning the proper construction of the 2003 Agreement. However, behind the claim, there are the tragic events of 26 October 2005, when Mrs Carswell lost her husband. In considering the somewhat esoteric issues involved in this case, I am sure that no one has for a moment forgotten that. I certainly have not.

However, for the reasons I have given, I shall dismiss this claim.

Some cases leave one with a heavy heart. Usually one party is dissatisfied with the overall outcome. Sometimes all. Often, in addition, the court is driven to comment adversely on the performance of some of the professional advisers involved.

This is not such a case. As I have indicated, Mrs Carswell, even with hindsight, is pleased with the net settlement she received from the MIB, and pleased with how Ms Smerdon handled her case. She appears to have obtained what she hoped to obtain, and what she bargained for. On the evidence I have seen, the case was handled well by Ms Smerdon. The advice from Counsel in the substantive claim proved sound. Ms Smerdon’s decision to be proactive in investigating quantum, even at the expense of a small part of the eventual award (which her client was willing to forego), appears to have been vindicated. As I have said, Mrs Carswell is pleased with the outcome. The MIB, overall, handled the claim properly and such that they arrived at a settlement that was acceptable to them. Finally, despite the allegations made in these proceedings, looking at the claim made by Mrs Carswell on the MIB as a whole, it illustrates some of the benefits of a compensation scheme over court litigation.